⏩ Inside Google and Facebook’s alleged secret antitrust partnership
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This week: TikTok hasn’t been banned yet, and Google and Facebook had a relationship that may have been too exclusive. Plus, a few predictions for a wild 2021 for tech.
The federal government is prominently suing Google and Facebook under antitrust law, alleging they used illegal practices to stifle competitors. But in an interesting side plot, the companies have now been accused of affording each other special advantages in an agreement known as -- we’re not making this up -- “Jedi Blue.”
This happened in 2017, when Facebook was experimenting with online ads: Facebook was already gaining on Google and had started a new plan for a complicated, exchanged-based ad system known as header bidding. Google had totally dominated this market.
But Facebook’s strategy would’ve been a major issue: In a court case filing reviewed by the NYT, a Google executive described the strategy as an “existential threat.” A year later, in 2018, Facebook suddenly joined an alliance of companies that agreed to follow header bidding rules favored by Google.
Facebook got something out of the deal: As part of joining the alliance, Facebook was given an advantage for learning identities of users and being able to better target the related ads. No other companies got the same advantage, which another executive described to the NYT as the equivalent of starting “every tournament in the finals.”
The agreement has antitrust written all over it
Literally. According to the NYT, FB and Google’s deal includes the word “antitrust” at least 20 times. Plus, the deal included language that both companies would assist each other if competitive concerns arose. (Both companies released statements denying any anti-competitive behavior).
It’s unclear how much this particular deal will matter in the government’s case against the tech titans. But Sally Hubbard, a lawyer with the Open Markets Institute think tank, told the NYT these types of deals among dominant players show another side of antitrust. “This idea that the major tech platforms are robustly competing against each other is very much overstated. In many ways, they reinforce each other’s monopoly power.”
2021 may end up being one of the most challenging years for the tech industry -- and not just because of pandemic recovery.
The Wall Street Journal shared a few insights on the potential road ahead. Here’s a quick rundown:
More lawsuits: As noted above, the antitrust actions are already very much in effect. But new developments in the big cases may lead to a ripple effect of smaller private companies going after Big Tech for what they deem unfair practices by the likes of Google and Facebook.
Slower growth: Tech, for the most part, succeeded in 2020. The pandemic led to greater adoption of products that may have otherwise needed years to take off. So watch out for smaller gains this year.
Dealing with cybersecurity: Major tech employees will likely need to be further acquainted with cybersecurity in the coming year, as the mix of remote work and security threats will keep companies on their toes.
Remember that whole TikTok controversy? Feels like a year ago, even though it was only like four months ago?
Yeah, it would make sense if you forgot. Nothing really happened, and now TikTok is about to be Joe Biden’s problem.
Donald Trump tried to ban TikTok: Many legal analysts considered it a PR move, and the failed execution of his ban certainly provides some evidence to back that up. After moving deadlines and nearly approving a deal to bring TikTok under US ownership, the White House distanced itself from the ban in the aftermath of the election.
But security concerns remain: TikTok is owned by ByteDance, a Chinese company with ties to Chinese government.
And Biden is a wild card: He hasn’t spoken specifically about TikTok but is expected to, generally, form a more aggressive and coherent plan against China than Trump. He may try to work with TikTok or may pursue an even tougher stance.
The legal issues at heart
Trump’s first attempt to block TikTok was to put it on a blacklist that would have made it difficult for other companies to work with it. But he later said those restrictions would be forgotten if TikTok was sold to American owners -- a sale that has still not been approved.
Meanwhile, the US, quietly, has actually banned Alipay and other Chinese apps starting next month. It will be up to the Biden administration to figure out the logistics of the bans -- and lawsuits are sure to follow.
If Biden actually believes in keeping the deadlines the Trump administration blew past, we should have TikTok answers soon. The latest deadline for the sale is Feb. 18.
💌 What else we’re forwarding
A law professor addressed the Capitol rioters: He’s John Eastman, who was also a former dean at Chapman University. The school did not formally punish him, but he abruptly decided to retire.
Big Law may be about to change for good: Law firms may be in upheaval this year, potentially a good kind of upheaval that leads to more flexible work schedules and lesser non-mandatory travel in the future.
🎧 Music to review contracts to
This morning we’re working to Frankie Reyes, an LA-based pianist focusing on the Oberheim synthesizer, which gives his work a soft ‘70’s feel to the ears. Honoring his Puerto Rican heritage, Frankie blends popular Latin compositions but removes the lyrics and emphasizes the melodic, harmonic, and rhythmic aspects of it. Enjoy these eight short pieces from his 2020 album Originalitos, whose tracks express the search for lost time.
Originalitos - Frankie Reyes (30m)
Happy inauguration day! 🇺🇸